Hiring for an executive or senior-level position is a difficult spot to be in. Vacant executive positions are urgent — and at the same time, you need to get it right the first time. On top of everything, the hiring process becomes more complex the higher up the ladder you go, with executive-level hires being some of the most difficult to do successfully.
And that’s why you’ll benefit from an executive search firm's services.
You’ll probably have some questions first, though. What is an executive search firm, how do they work, and when should you bring one in to help you with new hires? This article will cover the ins and outs of these organizations and the value they can provide for your business.
What is an Executive Search Firm?
An executive search firm, sometimes referred to as an executive recruiting agency or headhunter, is an organization that specializes in recruiting and hiring top candidates to fill executive, upper management, and other senior-level roles at companies with open positions.
Executive search firms exist primarily because sourcing, interviewing, and hiring an executive candidate is far more complex than placing an entry-level employee. This is because executives have a huge influence over an organization's direction, health, and growth. As a result, an executive search firm may spend months working alongside an organization in search of the ideal placement.
What Does an Executive Search Firm Do?
Executive search firms are sometimes confused with executive job search firms — but there is a clear distinction between the two. An easy way to remember the difference is in the name: Job search firms are for job seekers, which means executive job search firms are for job seekers at the executive level. Seekers can work with these firms to find a new job.
An executive search firm works for companies and organizations with vacant executive positions. When you need to fill a C-suite position, an executive search firm acts as your partner, relying on their own network to find pre-vetted talent who, even though they may not be actively job seeking, may be interested in the position you have to offer. From there, the search firm can handle the qualification and interview process to help you get your vacant position filled quickly and efficiently.
Why Does a Company Use an Executive Search Firm?
Executive search firms have expertise and resources that go beyond what most internal human resources have. Organizations lean on these firms and their networks to make these highly specialized hires.
Consider this: If you need to shift to a more data-driven company culture, it will be the CEO or another executive leading the charge. It takes a special set of skills for this sort of leadership to take place. Many owners and hiring managers lack the resources to create a pool of executive-level prospects with the experience, skills, and leadership ability that a company needs.
Conversely, an executive search firm has both the time and the resources to handle the entire executive staffing process from start to finish. Using their industry expertise and experience, executive recruiters fill your company’s open positions more effectively, quickly, and affordably. And that’s not to mention that candidates tend to trust executive search firms, often finding that they provide better communication, understanding of cultural fit, and knowledge of the company’s needs.
Types of Roles Executive Search Firms Hire
The executive search firm’s primary focus is to fill C-suite and leadership roles, which include a chief executive offer, chief financial officer, chief operating officer, and others. They also engage vice presidents, department heads, and upper management positions.
Chief Executive Officers (CEO)
CEO turnover is rising along with all other types of turnover. A Challenger, Gray & Christmas report finds that CEO exits rose 29% between 2021 and 2022, with exits in government and nonprofit organizations leading the way.
In other words, the chances that you’ll need to hire a CEO sometime in the future are rising — and you’ll likely need help filling this position since it’s the head of the C-suite. The CEO usually serves as the face of the company and as someone who other C-level executives can look to for advice on big decisions.
Chief Operating Officers (COO)
The COO is the C-level executive that heads human resources. Their job is to make sure that HR operations run smoothly. This includes duties like administrative services, recruitment, training, payroll, and any legal services involved with investing in or developing human capital.
Chief Technology Officers (CTO)
In the role of CTO, an ideal candidate must have in-depth knowledge of technology and tech trends — and they need to apply their knowledge and unique vision to developing products and services your customers want. CTOs often work closely with engineers to create marketable products or with developers to upgrade customer-facing web portals and other services that your customers use to shop. At startups, this role can be vital to developing the products and services that will give a company a lasting competitive edge.
Chief Information Officers (CIO)
The CIO is a tech-focused role. There is some confusion between CIOs and CTOs, but a CIO typically focuses on internal technology. In other words, the person filling this role will be in charge of IT infrastructure that your employees use, IT security, etc., whereas the CTO is focused more on customer technology.
Chief Marketing Officers (CMO)
You’ll have C-level executives in charge of developing new products for your clients — and then you’ll have C-level executives in charge of marketing those products to your clients. That’s what the CMO’s role is all about. CMOs are experts at innovating new marketing strategies, whether it's for brick-and-mortar stores or digitally. They’ll head up the marketing team responsible for spreading the word about your organization’s offerings.
VP Human Resources
The VP of Human Resources is similar to the COO — but there are key differences. The VP of HR typically focuses on the bigger picture, where the COO mainly focuses on day-to-day operations like the talent search process, hiring executive recruiting firms, or making sure payroll proceeds smoothly. This VP leads the HR department and focuses on regulatory compliance and legal services like contracts between partners, contractors, or vendors.
How Search Firms Find Executive-Level Talent
Unlike the hiring manager, the executive search firm uses a host of resources that allow them to find the best executive-level talent possible. They leverage job boards, recruitment platforms, social media networks, and personal networks to target executive candidates that may be the right fit.
What’s more, unlike entry-level recruiters, executive search consultants can search for top talent from coast to coast, New York to San Francisco and beyond, opening up a lot more talent than you’d find locally.
2 types of executive search firms
Executive search firms can have different specializations and business models. The two most prominent business models are contingent recruiters and retained recruiters, which we’ll explore below.
1. Contingent recruiters
A contingent recruiter doesn’t require you to pay fees upfront. Instead, you’ll pay once you’ve received and hired a high-quality candidate. Since a contingency firm’s pay is contingent on selecting candidates for positions, they tend to want to fill positions quickly. You’ll need to keep in constant contact with a contingency recruiter to let them know that you’re still interested in hiring with them.
When to use a contingent executive recruiter
Use a contingent recruiter when you need to staff positions quickly or when you need to fill a lot of mid- to low-level positions. Contingency recruiters tend to take on as many clients as possible and fill roles quickly in order to earn those contingency-based fees.
2. Retained recruiters
When you retain a recruiter, you pay a fee upfront, with the remaining balance due once a high-quality candidate has been selected and hired. These firms typically charge more, but they also tend to specialize in finding the best candidates for the C-level or a leadership team.
When to use a retained executive recruiter
Use a retained executive recruiter when searching for the best candidates in highly specialized fields, like healthcare, engineering, or technology. Since you pay upfront, retained recruiters tend to offer a little more in the way of executive search services — like getting an intimate understanding of your company to find the best possible candidates.
Advantages of Executive Search Firms
Many businesses find executive search firms to be invaluable resources. Advantages of working with an executive recruiting agency include:
- Lean on their hiring knowledge and experience for quicker hires.
- Source active job seekers from your firm’s large pool of potential candidates.
- Lure passive prospects to your organization through comprehensive search practices.
- Save time that your internal hiring team would typically spend searching, screening, interviewing, and onboarding candidates.
- Save money by getting an executive hire into your organization faster than if you were to hire in-house.
- Keep hiring more confidential in case you are planning to replace a current employee with your new hire.
Referral-Based Executive Search
Imagine if hundreds of CMOs could tap their networks to search for your next marketing leader. What would happen if the nation’s top sales executives referred their colleagues for your next VP of Sales? That’s the reality when you work with referral-based providers.
Benefits of referral-based executive search
- Sourcing referrals gives you access to the professional networks of hundreds of industry leaders.
- Referral-based executive recruiting cuts time-to-hire to half the industry average.
- Leave the hiring to your recruiting partner and focus your time on growing your business.
Cons of referral-based executive search
- You’ll need to ensure your recruiting partner is familiar with your company’s needs.
- It can be expensive to recruit this way, even though you’ll save time and money in the long run.
- Compared to promoting from within, you’ll be hiring someone unknown to you — though your recruiting partner’s vetting process should mitigate this.
Start your executive search today with Hunt Club
Need to source top talent for your organization? Browse our resources to learn more about what Hunt Club can do as your executive recruiter. You’ll discover that partnering with us will reduce your hiring time, limit the risks of a bad hire, and save you money compared to working through the complexities of executive hiring yourself.
Let Hunt Club help you make your next executive hire — get in touch to get started.